I have this problem a couple of times. I remember having it with Broken Sword and now I have it with the installation of Riddle of Master Lu.
It says I have insufficient space for the "maximum" install.
This ofcourse is amusing since I have 50gb free space and the games max install takes up 600mb.

A bit of a wild guess, but maybe the installer wants to install the game on a specific drive instead of the one on which you want it? So maybe your C drive has less than 600 mb and that is what it detects instead of the 50 gb you have left on the drive you want it?

Some older games have trouble reading the amount of free space available. If you are trying to install with DOSBox, try playing around with the "-freesize" switch in the autoexec section of the config file. You can refer to the DOSBox README for more information on how to use this. Also be sure that it isn't trying to install itself on the CD. Again, if you are using DOSBox, make sure that you have mounted both a "C:" drive in addition to the CD-ROM drive.